January 28, 2014 / 1:05 AM / in 4 years

SCANA raises stake in new Summer nuclear units; Duke bows out

HOUSTON, Jan 27 (Reuters) - SCANA Corp’s utility unit on Monday agreed to increase its ownership stake in two new nuclear units under construction in South Carolina, purchasing a 5 percent state from its public power partner for $500 million.

Directors of South Carolina’s state-owned electric utility, Santee Cooper, voted Monday to sell 5 percent of its stake in the two new 1,100-megawatt reactors under construction at the VC Summer plant, reducing its share to 40 percent.

SCANA’s South Carolina Electric and Gas Co will own 60 percent of Summer units 2 and 3, which are among the first advanced-design nuclear reactors to be built in the United States in more than 30 years.

The once-predicted revival of U.S. nuclear construction has been tempered by lower natural gas prices, anemic growth in electricity demand and the lack of restrictions on emissions of carbon dioxide.

The only other new U.S. reactors are being built by Southern Co’s Georgia Power unit, along with partners, at the Vogtle nuclear plant in Georgia.

Since 2011, Santee Cooper has negotiated with a number of utilities from Florida to Ohio in an effort to reduce its stake in the Summer nuclear units, saying the recession had slowed the state’s electric growth projections.

Santee Cooper’s talks failed to produce an agreement. Only Duke Energy still expressed interest in investing in the new Summer reactors.

On Monday, however, Duke said in a brief filing that it was “no longer engaged” in discussions with Santee Cooper regarding the potential acquisition of a 5- to 10-percent ownership interest in the Summer reactors.

Last year, Duke dropped a plan to build two new nuclear reactors in North Carolina, citing slow growth in power demand.

Santee Cooper officials previously they wanted to reduce the utility’s stake in the new reactors to about 20 percent.

“The past few years have shown unprecedented volatility in base load fuel costs and increasing regulatory pressures on fossil-fueled generation,” said Lonnie Carter, Santee Cooper’s chief executive, in a statement.

“Today’s action reduces our costs to customers somewhat, while still preserving an ownership level that will position us well for the flexibility we will need going forward,” Carter said.

SCANA said the additional 110 megawatts it will gain from the deal will replace a portion of the coal-fired generation it expects to retire over the next five years.

The increase in ownership of the new nuclear project “will delay the need to build new gas-fired capacity after 2020,” said Kevin Marsh, SCANA chairman.

SCANA said the 5-percent ownership interest will be acquired in three stages, with 1 percent to be acquired in late 2017 or early 2018 when the first new Summer reactor is scheduled to begin commercial operation. An additional 2 percent would be acquired before the first anniversary of commercial operation and the final 2 percent would be acquired before the second anniversary date.

The agreement also provides that Santee Cooper will not transfer any of its remaining ownership interest in the two new units until both units are completed, the companies said.

The transaction is subject to regulatory approval.

Previously, Santee Cooper said it negotiated with the Florida Municipal Power Agency, the Orlando Utilities Commission of Florida, American Municipal Power of Columbus, Ohio, and the South Mississippi Electric Power Association.

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